Mark Shorrock, chief executive of Tidal Lagoon Power (TLP), said he hoped to get consent for the project from the Energy Secretary Ed Davey by next March

Mark Shorrock, chief executive of Tidal Lagoon Power, at the location of the proposed tidal lagoon in Swansea Bay

Swansea Bay tidal lagoon has taken a step further towards becoming a reality with the Planning Inspectorate beginning its examination into the proposal.

And the man behind the scheme says he already has cornerstone commitments totalling £225m in debt and equity towards the £900m cost of the project.

Mark Shorrock, chief executive of Tidal Lagoon Power (TLP), said he hoped to get consent for the project from the Energy Secretary Ed Davey by next March.

He said: “We’re putting three years of work on coastal processes, social economics, tourism etc in front of the Planning Inspectorate and the Inspectorate has to take a view that they think our project is going to be a benefit for climate change and for humans and not be overly detrimental to the environment.”

TLP was due to have a pre-examination meeting with the Planning Inspectorate this week. The examination period will last until the end of October with the Planning Inspectorate likely to make a recommendation to the Energy Secretary in January.

If Mr Davey does approve the project TLP will want to start construction next summer, providing it has the finance in place.

The equity commitment is understood to come from a large specialist infrastructure fund and the debt commitment from a large European bank.

“Other parties we’re talking to are large international pension plans and other large UK infrastructure investment specialists. I haven’t had to go outside London for investment,” Mr Shorrock said.

Key to securing finance for the £900m build will be negotiating a strike price – effectively a subsidy under the UK Government’s contract for difference scheme to promote renewable energy.

A report by energy and engineering consultancy Pöyry in March concluded that the Swansea Bay lagoon would require a strike price of £168/MWh (megawatt hour) under a contract for difference of 35 years duration.

This compares to a strike price of £155/MWh for offshore wind farms being commissioned in 2014-15 and £140/MWh for those commissioning in 2018-19.

“We’ve always said you want to be within spitting distance of what offshore wind gets today, because that’s not bad for a first tidal project. To be getting the same subsidy level as a technology that’s already deployed 5,000MW still gets, that’s a good start,” Mr Shorrock said.

Crucially, the Pöyry report also found that a second and third lagoon – both of which would be significantly larger than the Swansea Bay project – would require strike prices of £140/MWh and £92/MWh respectively.

“If government can get comfortable with [the fact that] only the first one needs what offshore does, then we leapfrog offshore wind and we’re cheaper than offshore wind for any future lagoons,” Mr Shorrock said.

He added that in its assessments of TLP’s project the Department for Energy and Climate Change (DECC) had taken “a generic Liverpool Bay or larger Severn estuary lagoon on top of looking at Swansea’s numbers.”

TLP stands behind Tidal Lagoon Swansea Bay, the special vehicle company set up to develop the Swansea Bay lagoon. The company recently hired Steve Hollingshead, former CEO of Laing O’Rourke in Australia, to drive the delivery of the project.

It has received tenders from three major international turbine manufacturers, including Alstom and Voith, and will make a decision on the tenders over the next two months.

TLP will remain as long-term owners and operators of Swansea Bay and any future lagoons.

“Our 10-year plan is develop five lagoons, [generating] 10% of the UK’s electricity, hold a residual stake in each one of the lagoons and operate them and then we can get feedback loops as to how the turbines work, and how you optimise things,” Mr Shorrock said.

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